Mexico Looking to Avoid 'Tomato War' with U.S.

Mexico City – Mexico's government expressed concern that the United States may cancel a 16-year-old agreement setting the price for its tomato exports, saying it will urge Washington not to opt for protectionist measures.

Mexico intends to "exercise a staunch and resolute defense of our trade interests and our Mexican tomato industry to prevent protectionist measures from being adopted," the economy ministry said in a statement, alluding to potential retaliatory tariffs.

Its remarks came after the U.S. Commerce Department announced a preliminary position last week in favor of terminating the deal.

The economy ministry added that an end to the accord not only would adversely affect the bilateral trade relationship but also harm "tomato workers, producers, exporters, importers, sellers and consumers on both sides of the border."

The ministry said that since June, when it learned of Florida growers' intention to seek the cancellation of the 1996 pact, it has taken various steps to defend the interests of Mexican producers.

Mexican media, meanwhile, has quoted Economy Secretary Bruno Ferrari as saying it was "obvious" that the request by the growers in Florida, a key swing state, was aimed at putting pressure on the Obama administration ahead of the November election.

The ministry also noted that numerous state-level officials and tomato producers in Mexico have expressed their support for legal efforts to defend the sector.

It said it will actively participate in the administrative procedure the Commerce Department launched to "decide whether or not to end the price agreement."

Noting that on Sept. 4 Mexico submitted a letter in support of its producers, the ministry said it will present new arguments over the next 40 days, the timeframe the U.S. Commerce Department has set for receiving additional comments and objections from stakeholders.

Mexico's deputy trade secretary, Francisco de Rosenzweig, also will meet in Washington with representatives of Mexico's tomato industry and U.S. government officials in a search for a mutually beneficial solution, it said.

The existing bilateral pact is known as a "suspension agreement" because the Commerce Department in 1996 halted an anti-dumping investigation against Mexico and negotiated a minimum price for imports of Mexican tomatoes.

In a statement last week, Florida Tomato Exchange director Reggie Brown slammed the agreement as "outdated and failed" and said the Commerce Department's preliminary position was "welcome news to domestic growers."

In addition to Mexico, U.S. agricultural and business groups have also expressed opposition to ending the pact, with the Fresh Produce Association of America saying that U.S. producers could request the imposition of tariffs on Mexican tomatoes if the agreement were to be scrapped, potentially triggering a trade war.

The Commerce Department announced its decision last Thursday on the eve of a scheduled meeting with Mexican tomato producers, who are willing to renegotiate the pact to prevent it from being terminated.

The United States imported $8.5 billion worth of farm products from Mexico last year, more than from any other nation. Tomatoes accounted for nearly a quarter of the total.